May 9, 2014
This past Tuesday was an historic day. Here’s a breakdown of the three news stories that point to the economic impact of climate change.
First, the White House released the Third National Climate Assessment, a comprehensive analysis documenting the impact of climate change in all regions and economic sectors of the US. For President Obama, this is a reinvigorated strategy to address climate change.
While the findings are not new, it once again points to the need to address the issues of climate change. At the same time, investments for climate change probably offer one of the greatest economic opportunities to generate innovation and create job growth while improving corporate profitability.
Unfortunately, there will be many companies that fail to adapt and may hit troubled waters in the future.
In short, it is easy to see how climate change will likely create many winners and losers at the same time.
The second announcement was made by Stanford University who stated that the university will not “make direct investments of endowment funds in publicly traded companies whose principal business is the mining of coal for use in energy generation.” Stanford’s investment policy states “that the trustees’ primary obligation in investing endowment assets is to maximize the financial return of those assets to support the university.” The decision was driven by the investment committee including “corporate policies or practices that create substantial social injury,” as an additional factor in the investment decision.
After extensive debate and interaction with the student body, Stanford made a bold decision to divest. Stanford is active on many fronts in addressing the challenges of global climate change, with university faculty members playing a key role in the U.N. Intergovernmental Panel on Climate Change process. In addition, many alumni are active in the clean tech and renewable universe, driving innovation and solutions to climate change. All told, Stanford is to be commended for this historic action.
More importantly, Stanford should serve as a beacon for other colleges and universities to gain a greater understanding of the alignment of their investment portfolios with the academic curriculum of the schools. After all, if Environmental Science 101 addresses the harms of global warming, how can the school own coal stocks? And, how can research and education contribute to the accelerating transition to renewable sources of power?
If the students read the recently released government report—-or any of the other thousands of reports over the last decade—in which extensive academic research has been written warning of the impact and causes of climate change, it is hard to at least not have an in depth debate of divestment or not.
The third statement on Tuesday was Thomas Friedman’s OpEd (Go Big, Get Crazy) piece in the New York Times in which he discussed the Ukrainian situation, Putin, and Obama. Friedman suggests that the way to get Putin is to hit him in the gut with an “American domestic grand bargain on energy” and then watch the price of global oil and gas. “Obama should summon the congressional leadership to Camp David and put his own plan on the table,” including the Keystone pipeline, more drilling and fracking, but yet a new renewable portfolio standard.
What a great idea! How come nobody else thought about that before? “It would simultaneously increase our leverage against Putin and Mother Nature.”
“Go big, Mr. President. Get crazy.”
We should all get crazy. The alarm is ticking on the climate clock, and three alarms were sounded on Tuesday. We can’t afford to hit the snooze button again. It’s time for bold action.
While Super Tuesday was an important day, we expect to see more milestones in the future as the awareness of global warming grows. As part of our continuing contribution to investor awareness, we will be issuing a detailed research report next week on water: Investing in a Thirsty Planet.